News from Notch Consulting, Inc.

September 16, 2010

Lanxess Forecasts Tight Markets for Polybutadiene & Butyl Rubber

Filed under: General, Tires — Notch @ 11:52 am

Here are two interesting presentations from Lanxess’s Capital Markets Day on September 16.

Business Unit Performance Butadiene Rubbers – Taking performance to a new level
Joachim Grub, Head of Business Unit

Business Unit Butyl Rubber – The Enabler of Mobility
Ron Commander, Head of Business Unit

A few observations:

  • Lanxesss sees tire fuel efficiency standards in Europe and tire fuel efficiency labeling programs in the US and Japan as major drivers for BR demand going forward. In particular, Lanxess feels that its LXS HP rubber can be useful in improving rolling resistance in tire treads.
  • Truck tire retreading is also a leading driver for BR demand, especially as retreaders strive to improve fuel economy and extend the tread life of retreaded tires (which will promote demand for high performance elastomers).
  • Coupled with tire labeling programs, the continued diffusion of hybrid and electric vehicles will promote consumer awareness of the rolling resistance ratings of passenger tires. The BR presentation forecasts that 40% of global car registrations in the year 2020 will be electric/hybrid.
  • The butyl presentation highlights the growing middle class in the BRIC countries as a key driver, along with investments in road infrastructure and ongoing radialization.

Did Cash for Clunkers Work as Stimulus?

Filed under: Carbon Black, General, insoluble sulfur, Rubber Chemicals, Tires — Notch @ 9:39 am

We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.

From a paper by Atif Mian and Amir Sufi, “The Effects of Fiscal Stimulus: Evidence from the 2009 ‘Cash for Clunkers’ Program,” available here.

For my part, I’m not sure what kind of vehicle scrappage program would not, by its very definition, pull purchases forward from the very near future. After all, one can only encourage vehicle trade-ins amongst those already inclined to trade in their vehicles. I do think that the per-vehicle rebates could have been reduced and spread out over a longer period. As it happened, the CFC program created a tsunami of demand over a very short window, jolting the automotive and tire industries from the absolute trough of the recession into overdrive and creating shortages in an industry that had reduced inventories to rock-bottom levels.

Solutia Appoints New President of Technical Specialties

Filed under: General, Rubber Chemicals — Notch @ 8:10 am

Yesterday, Solutia named Greta Senn as president and general manager of its Technical Specialties division, which includes the Flexsys rubber chemicals business. She replaces Mike Donnelly, who has been named president and general manager of Solutia’s Performance Films division, which manufactures films that provide energy savings and safety and security benefits when applied to glass, as well as high-value precision coated films and film components for advanced technology and performance products.

Greta Senn most recently served as vice president, business management of the Technical Specialties division. Her previous responsibilities included developing and implementing new strategies for some of Solutia’s most profitable product lines, including Solutia’s specialty fluids and Crystex businesses.

Here is the press release.

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